Question

What is adverse selection in insurance?

a.

The situation where the amount of insurance applied for is in excess of the potential economic loss

b.

The situation where the amount of insurance applied for is less than the potential economic loss

c.

The situation where the individual's medical conditions are not disclosed for insurance coverage

d.

The situation where the individual's age is not disclosed for insurance coverage

Posted under IC22 Life Insurance Underwriting

Answer: (a).The situation where the amount of insurance applied for is in excess of the potential economic loss Explanation:Adverse selection (also termed as anti-selection) is the situation where the amount of insurance applied for is in excess of the potential economic loss.

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